Range Resources Ties Fortunes To Marcellus Shale

Before the Marcellus Shale leaped into prominence as the largest natural gas play in the U.S., there was the Barnett Shale in Texas.

Range Resources (RRC) has worked both basins. But the Fort Worth, Texas-based firm is now largely focused on the Marcellus in Pennsylvania, which has fueled most of its growth.

Range Resources is so sold on the Marcellus that it sold off all its holdings in the Barnett. The $900 million in proceeds from that sale two years ago were reinvested into the Marcellus.

A Range Resources rig in Pennsylvania's Marcellus Shale, where the company is said to have good locations. none View Enlarged Image

"The Marcellus Shale is now larger than the Barnett and the largest gas field in the U.S. by far," said Range's CEO Jeff Ventura. "In fact, you could argue that its reserves' potential makes it the second largest in the world."

The largest is the South Pars/North Dome field in Iran and Qatar. As Ventura tells it, Range "discovered" the Marcellus and "everyone agrees with that."

In looking to find "the next Barnett," Range saw that the Marcellus Shale had a lot of the same characteristics as the Barnett.

That was in 2004. Range began drilling in the Pennsylvania portion of the play soon after, using the then-new hydraulic fracturing techniques needed to crack the hard shale rock in order to extract gas. It found great commercial value there.

"Barnett is a good play, but the quality of the rock and the economics don't really compete with the Marcellus," Ventura said.

He says wells in its southwest Pennsylvania sweet spot produce three times as much as its wells had in the best spots in the Barnett.

Other firms followed Range into the Marcellus in what eventually became a virtual stampede. They include Chesapeake Energy (CHK), Cabot Oil & Gas (COG), EQT Corp. (EQT) and Chevron (CVX), among others.

"Chevron has good (acreage), but I would argue that ours is better," Ventura said. "They're in the dry (gas) area of southwest Pennsylvania. We have the advantage of having more wet gas, plus we have more net acreage than Chevron, which gives us greater leverage for future growth."

Though Range still has some oil operations in Oklahoma and Texas, most of its production comes from the Marcellus.

Range is currently one of the largest producers in the Marcellus, accounting for 10% of the basin's total production.

100% Positions

While its 1 million net acres may be topped by a couple of other players, Ventura says Range stands out for holding 100% positions in its acreage, unlike others that often form joint ventures and other deals with third parties.

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